Trump's sweeping tax-cut bill, passed with tight 215-214 vote split, heads to Senate

The Republican-controlled US House of Representatives narrowly passed a sweeping tax and spending bill that would enact much of President Donald Trump's policy agenda on Thursday and saddle the country with trillions of dollars in debt.

The bill would fulfil many of Trump's populist campaign pledges, delivering new tax breaks on tips and car loans and boosting spending on the military and border enforcement. It will add about $3.8-trillion (R68.46-trillion) to the federal government's $36.2-trillion (R652.22-trillion) debt over the next decade, according to the non-partisan Congressional Budget Office (CBO).

What Trump called the “one, big, beautiful bill” passed in a 215-214 vote, with all of the chamber's Democrats and two Republicans voting against it. A third Republican voted “present”.

The package must also win approval in the Republican-controlled Senate before Trump can sign it into law. The vote came after a marathon push that kept legislators debating the bill through two successive nights.

The 1,000-page legislation would extend corporate and individual tax cuts passed in 2017 during Trump's first term in office, cancel many green-energy incentives passed by Democratic former president Joe Biden and tighten eligibility for health and food programmes for the poor. It would also fund Trump's crackdown on immigration, adding tens of thousands of border guards and creating the capacity to deport up to a million people each year.

The bill passed despite growing concerns about US debt, which has reached 124% of GDP, prompted a downgrade of the US' top-notch credit rating by Moody's last week.

The US government has recorded budget deficits every year of this century, as Republican and Democratic administrations have failed to bring spending in alignment with revenue.

Interest payments accounted for one out of every eight dollars spent by the US government last year, more than the amount spent on the military, according to the CBO. That share is due to grow to one out of every six dollars over the next 10 years as an ageing population pushes up the government's health and pension costs, even if Trump's budget bill is not taken into account.

Investors, unnerved by the US' fiscal standing and Trump's erratic tariff moves, are increasingly selling the dollar and other US assets that make up the bedrock of the global financial system.

“We're not rearranging deck chairs on the Titanic tonight. We're putting coal in the boiler and setting a course for the iceberg,” said Representative Thomas Massie of Kentucky, one of the two Republicans to vote against the bill.

Republican supporters of the bill argued failure to pass it would have raised taxes for many American households. They also plan to use the bill to raise the federal government's debt ceiling, a step Congress must take by summer or risk triggering a devastating default.

“The success of the country depends on it,” Representative Stephanie Bice, an Oklahoma Republican, said on Wednesday. “These are pro-growth objectives the president’s in favour of and so we’re moving forward.”

With a narrow 220-212 majority, House speaker Mike Johnson could not afford to lose more than a handful of votes from his side.

Republicans on the party's right flank pushed for deeper spending cuts to lessen the budget impact, but they met resistance from centrists who worried they would fall too heavily on the 71-million low-income Americans enrolled in the Medicaid health programme.

Johnson made changes to address conservatives' concerns, pulling forward a new work requirements for Medicaid recipients to take effect at the end of 2026, two years earlier than before. That would kick several million people off the programme, according to the CBO. The bill also would penalise states that expand Medicaid in the future.

Johnson also expanded a deduction break for state and local tax payments, which was a priority for a handful of centrist Republicans who represent high-tax states such as New York and California.

Democrats blasted the bill as disproportionately benefiting the wealthy while cutting benefits for working Americans. The CBO found it would reduce income for the poorest 10% of US households and boost income for the top 10%.

“This bill is a scam, a tax scam designed to steal from you, the American people, and give to Trump's millionaire and billionaire friends,” Democratic Representative Jim McGovern said.

The Senate, where Republicans hold a 53-47 majority, is not expected to take the bill up until early June. Top Senate Republicans have said that chamber may make significant changes to the bill before passing it. 

Reuters